Oral statement by David Miliband on the new Single Payment Scheme - Tuesday 7 November 2006
With permission Mr Speaker, I would like to make a statement on the Single Payment Scheme (SPS) administered by the Rural Payments Agency (RPA).
In my written statements on 9 May and 5 July, and in my oral statement on 22 June, I said that the well rehearsed difficulties in administration of the 2005 SPS would create challenges for delivery of the 2006 scheme, and I promised to keep the House informed of developments. On this occasion, as on every other, I would like to reiterate the apologies I have offered to farmers on behalf of my Department, and my commitment to remedy the problems. Today I can report progress under the 2005 Scheme, and plans for the 2006 Scheme. But the interim Chief Executive of the RPA and I are clear that much more needs to be done to learn the right lessons from the NAO’s recent report and to build on helpful guidance I am sure we will see in the forthcoming reports from the EFRA Select Committee, Public Accounts Committee, Office of Government Commerce and the Hunter Review.
As I mentioned in my written statement on 5 July, the total amount to be paid by the RPA for the 2005 Scheme will not be known for certain until the last claim is completely validated and necessary corrections are made. However, the latest estimate at 3 November puts the figure at £1.528 billion of which over £1.516 billion (99.2%) has now been paid. 110,244 claimants have received a full payment and a further 4,756 have received a partial payment and are awaiting their ‘top up’. The combined total of 115,000 represents 98.5% of the revised estimated total claimant population entitled to a payment of 116,661.
All but 50 of the claimants still awaiting any payment are currently calculated to have a claim value of less than 1000 Euro. The 50 are all difficult cases, involving issues such as probate or business liquidation, which would be challenging in any year. Dedicated teams are in place to deal with these cases and the other outstanding payments as soon as possible.
Similarly on Hill Farm Allowance payments, some 95% of claimants have received a full or partial payment, and a dedicated team is exploring all avenues to make the outstanding payments as soon as possible.
During October the RPA moved the bulk of its processing staff to detailed validation of the 2006 claims. Initial validation of those claims has been undertaken over the summer and has gone relatively smoothly. The same can be said of the 2006 round of eligibility inspections. However, the difficulties involved in completing 2005 claim processing have inevitably impacted on the 2006 payment timetable.
Everyone wants claims paid in full as soon as possible. I understand that and the new management of the RPA are dedicated to build stability and predictability into the system so that full claims are delivered in an efficient and timely way. However, the interim Chief Executive has reported to me that he can not guarantee that the Agency can deliver full payments within the payment window for the 2006 Scheme. Neither he nor I believe it is acceptable to expect farmers to wait until next June or beyond for payments. I have therefore agreed with the RPA a challenging formal performance target of paying 96.14% of valid 2006 claims by 30 June 2007 and they are determined to do all in their powers to deliver on that. In addition, I have also decided to pursue a partial payment plan.
Our aims can be simply stated. First, we want to maximise payments to farmers that arrive on a timely and predictable basis. That means making full payments where possible and partial payments where necessary. Second, we want to minimise the risk of late payment penalties and disallowance. Third, we want our decisions this year to help the RPA establish a new and sound footing for the delivery of SPS in the future.
I have therefore agreed with the RPA that where full payments are not possible in the early part of next year, partial payments should start in mid-February for eligible claims above 1000 Euro. The RPA estimate that the process will take around three weeks. Payments will be made for not less than 50% of claim value. This reflects the level which EU Regulations permit without diverting significant resource away from, and therefore delaying, work on validating claims for full payments.
Needless to say I will be keeping the situation under close review, but the interim Chief Executive of the RPA has set out for me and for Lord Rooker the basis on which he is confident that partial payments can be made, and we believe, in part on the basis of the partial payment experience in May this year, that the money will be delivered.
Mr Speaker, the Single Payment Scheme and its administration has caused distress to farmers. The only way to make good on this year’s problems is to improve the management of the system so that confidence is rebuilt. I have set out clearly that this will not happen overnight, but I believe the staged approach I have set out is the only one that is prudent and responsible, and I commend it to the House.
Page published: 7 November 2006